China’s consumer internet has long been dominated by e-commerce giant Alibaba and social media titan Tencent. But this duopoly hasn’t stopped one young company from capturing an ever larger share of people’s online spending.

The root of Meituan’s rise lies in the group-buying business. It was founded in 2010 by serial entrepreneur Wang Xing as China’s answer to Groupon, where people can get discounts by pre-ordering restaurant meals or reserving karaoke bars together. After beating out rivals such as the Baidu-backed Nuomi to become the largest of its kind in China, Meituan expanded aggressively into more local services. For example, it added food delivery, so people don’t have to leave its platform to order restaurant take-outs. In 2015 it merged with China’s Yelp Dazhong Dianping, with the new entity being valued at $15 billion at the time.

“The Groupon model is extremely competitive in China,” says Ken Xu, a Shanghai-based partner at investment firm Gobi Partners. “The best way to stay ahead of rivals is actually expanding into more verticals, so you can become a comprehensive online platform with higher user engagement.”

Now, under the 39-year-old Wang, who's worth an estimated $4.1 billion, the company has a stronghold in several online markets. By spending heavily in meal subsidies, leveraging Dianping’s big user base and building a large logistics network across China, Meituan elbowed aside the Alibaba-owned Ele.me to grab 46% of the country’s 200 billion yuan ($31 billion) food-delivery market last year, according to consultancy Trustdata. It also surpassed Chinese travel site Ctrip in terms of total hotel rooms booked through the platform, thanks to a strategy that focuses on promoting discounted rooms to consumers in lower-tier cities, according to research firm Pacific Epoch. Ctrip, though, holds absolute advantage in more premium offerings such as five-star hotels.

“Meituan is getting closer and closer to becoming a super app,” says JP Gan, managing partner of investment firm Qiming Venture Partners, which has invested in Meituan. “Its goal is becoming a platform that people use regularly for dining, for housing and for transportation.”

Online transportation is the company’s next frontier. Meituan acquired in April the bike-sharing startup Mobike for $2.7 billion excluding debt, while recently launching its own ride-sharing service in seven Chinese cities, where it has been doling out digital coupons to attract drivers and passengers alike. To the company, this is a natural next step, because it gives users the option to arrange transport for services booked on Meituan directly inside the app. It has its own digital payment service too, so people can settle bills generated on Meituan with its own e-wallet.

By building such an ecosystem of online services, the company is marching into WeChat’s territory. The Tencent-owned super app, which now has more than a billion users, has evolved far beyond instant messaging and added functions such as mobile payment, online shopping and ride sharing. As Meituan contends in the super app arena, it is on collision course with WeChat, as both companies want users to stay longer inside their platforms and spend more on services offered, according to Gobi’s Xu. “There will be some impact on WeChat,” he says. “As Meituan keeps pushing its boundaries, it can change the status quo.”

Ironically, Meituan actually counts Tencent as a shareholder. Now, the rapidly growing Meituan, together with ride-sharing firm Didi Chuxing and media startup Bytedance, which runs the popular Toutiao news app, is collectively known as China’s TMD companies–an acronym for a generation of up-and-comers challenging the country’s old tech trinity of BAT, or Baidu, Alibaba and Tencent.

But it isn’t all good news for Meituan. Competition, for one, remains cutthroat. To fend off Alibaba’s Ele.me in food delivery, the company has no choice but to match competitors’ spending and keep giving out discounted meals. The heavy subsidies, which sometimes make people’s lunch end up costing less than $1, means that Meituan is unlikely to make money from this market any time soon, says Pacific Epoch analyst Steven Zhu. Wang Xiaoyan, an analyst at Shanghai-based 86 Research, is more optimistic. She said the company is generating more revenues by allowing restaurants to place advertisements on its app and bid for key search words, which potentially offsets some losses.

Meituan’s expansion into ride sharing is another challenging front. It is seeking to lure passengers away from Didi by offering discounted rides, with Wang once saying that he is setting aside at least $1 billion to support the company’s nascent ride-sharing unit. This imminent price war is pushing Meituan further away from profitability, Zhu said “This is not an easy part for them,” he says. “They only have money to fight with Didi, but they don’t have as much management experience.”

Meituan is forging on. Many of China’s cinemas and restaurants are still not online, meaning Meituan can expand further by linking them with internet-savvy consumers through its app, said Qiming's Gan. To get ahead of competitors, he said, it is simply necessary to keep attracting new users with freebies, so Meituan can achieve scale and monetize later.

I am a Beijing-based writer covering China's technology sector. I contribute to Forbes, and previously I freelanced for SCMP and Nikkei. Prior to Beijing, I spent six months as an intern at TIME magazine's Hong Kong office. I am a graduate of the Medill School of Journalism...